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Howard Stutz
 

Nevada AG: DraftKings executive called DFS 'almost identical to a casino'

19 October 2015

The Nevada attorney general's office determined that daily fantasy sports constituted sports wagering after it was discovered the chief executive of DraftKings said his website was "almost identical to a casino."

DraftKings CEO Jason Robins made the comments on Reddit.com, an entertainment, social networking and news website where registered members can submit content. On the thread, submitted three years ago, Robins engaged in an online discussion about how he and two friends started DraftKings, which is now one of the two largest daily fantasy sports providers.

"In short, daily fantasy sports constitute sports pools and gambling games," Brin Gibson, chief deputy attorney for gaming and government affairs, wrote in a memo to the Nevada Gaming Control Board that was posted to the agency's website late Friday. "They may also constitute lotteries, depending on the test applied by the Nevada Supreme Court. As a result, pay-to-play daily fantasy sports cannot be offered in Nevada without licensure."

The memo is what Control Board Chairman A.G. Burnett based his order, filed Thursday, which effectively banned unlicensed daily fantasy sports operators, such as DraftKings and rival FanDuel, from offering their product in Nevada. Burnett said playing daily fantasy sports was not illegal, but the activity had to be run by a Nevada licensed sports pool operator.

Robins' comments on the Reddit site differed greatly from comments he made in September at the Global Gaming Expo in Las Vegas. During a panel discussion on whether or not fantasy sports is a form of gambling, Robins said daily fantasy sports was a game of skill, similar to chess or playing the stock market.

Robins said the players attracted to Boston-based DraftKings were predominantly millennial men ages 21 to 35 who are analytical and favor data and research. He said under 15% of his customers have placed a sports wager in a Nevada sportsbook or with an offshore sports wagering website.

"They do their homework," Robins said. "It's like the stock market. They enjoy looking at something and trying to figure out something that someone else doesn't see."

A spokesperson for DraftKings did not respond to an e-mail requesting comment.

Earlier this year, the Control Board asked the attorney general's office — the agency's legal adviser — to research the legality of daily fantasy sports.

"This conclusion — that daily fantasy sports are gambling — is consistent with how operators of certain daily fantasy sports describe themselves," Gibson wrote.

In August, DraftKings announced it applied for and received gaming licenses to operate in the United Kingdom.

The attorney general determined the licenses were granted for a "pool betting" and "gambling software." The company, however, never identified the licenses as gaming.

"It appears that DraftKings recognizes the appearance of inconsistency between its position that it should be unregulated in the United States and its decision to submit to gaming regulation in the United Kingdom," Gibson wrote.

DraftKings and FanDuel, the two largest daily fantasy sports websites, said they would abide by the ban imposed Thursday.

However, the sites that control 90% of the daily fantasy sports market disagree with the board's finding that their activities constitute sports wagering. DraftKings and FanDuel both circulated online petitions to their Nevada customers Friday, encouraging them sign in opposition to the regulatory order.

Customers in Nevada found their daily fantasy sports accounts listed as "restricted" late Thursday night and Friday morning.

Several sports book and casino operators said Friday they weren't planning to launch daily fantasy sports websites with others now out of the picture.

Gaming industry analysts and observers said Friday there were more questions than answers after Nevada became the first state to block daily fantasy sports for legal reasons.

Five other states — Arizona, Louisiana, Iowa, Montana and Washington — said their residents can't participate because of state-specific regulations against cash prize awards. On Friday, the Illinois Gaming Control Board said it would seek a legal opinion on daily fantasy sports sites.

"The big question is we don't have a firm sense of what the threshold will be for compliance," said Chris Grove, publisher of LegalSportsReport.com.
Nevada AG: DraftKings executive called DFS 'almost identical to a casino' is republished from GamingMeets.com.